retail price index

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Related to retail price index: consumer price index

Retail Price Index

A measure of inflation that considers what people spend on staple goods and services. It is calculated by taking the average of changes in price to a basket of goods and services compiled by the appropriate government agency. The goods and services in the basket are weighted according to their perceived importance. The RPI was considered a primary tool in determining how people are experiencing inflation, but it has largely been superseded by the Consumer Price Index. It is primarily used today in the British news media.
Retail price indexclick for a larger image
Fig. 169 Retail price index. Composition of the RPI. Source: Office for National Statistics.

retail price index (RPI)

a weighted average of the PRICES of a general ‘basket’ of goods and services bought by final consumers. Each item in the index is weighted according to its relative importance in total consumers’ expenditure (see Fig 169 ). Starting from a selected BASE YEAR (index value = 100), price changes are then reflected in changes in the index value over time. Thus, taking the example of the UK's ‘all items’ Retail Price Index (RPI), the current RPI base year is 1987 = 100, in February 2005 the index value stood at 189, indicating that retail prices, on average, had risen 89% between the two dates.

A retail price index is commonly used to measure the rate of INFLATION and as a GNP DEFLATOR. In the UK, the ‘all items’ RPI was formerly used to measure the ‘headline’ inflation rate, while the RPIX index, which excludes mortgage interest payments, measured the ‘underlying’ inflation rate. In December 2003, the RPI was replaced by the CONSUMER PRICE INDEX (CPI) as the government's ‘official’ meaure of inflation, thus bringing it into line with European Union practice. See HARMONIZED CONSUMER PRICE INFLATION RATE. See Fig 93 (a) , main INFLATION entry, for statistics on inflation rates in recent years.

References in periodicals archive ?
HSBC economist Mr Jonathan Loynes said the news should put a February rate cut by the Bank of England's Monetary Policy Committee back on track "if only because it bodes well for an immediate reversal of the increase in the retail price index we saw in D ecember".
Merseytravel chief executive Neil Scales said: ``The new operator has agreed not to raise fares overall more than the retail price index for the next 25 years, a feature unique to Merseyrail.
The Retail Price Index, which includes retail price inflation and some housing costs, also fell from 2.
The headline rate of Retail Price Index inflation, which includes mortgage interest payments, was unchanged at 2.
The rate of inflation, measured by the retail price index, dipped after banks and building societies followed the 0.
But British Retail Consortium director general Bill Moyes said: ``Even with the rise in the shop price index the figures show that strong sales growth is not creating worrying inflationary spikes in the retail price index.
The index is different from the official UK inflation figures known as the retail price index because they do not include the costs of many public and private services such as council tax and costs to the health service.
We have carefully considered the current economic conditions, the pressures the business faces, the UK's Retail Price Index (RPI), and concluded that it is the right thing to do.
Train companies base their annual fare increases for regulated fares (which include annual season tickets) on the retail price index (RPI) for July plus 1%.
The Government's preferred barometer, the retail price index, which includes mortgages, was unchanged at 2.
The Consumer Price Index (CPI), which excludes housing costs, was being sidelined in favour of the Retail Price Index (RPI), according to pay analysts Incomes Data Services.
The Bank of England is to say goodbye to the Retail Price Index and use a European inflation target.